Central: Irvine, Santa Ana/Tustin, Fountain Valley
- Leading the county in industrial development in recent years has been the Airport-Irvine area, with its substantial high-tech tenant base.
- Warehouse/distribution. At 12.5 million square feet, the Irvine warehouse/distribution submarket is large relative to other county submarkets.
- No space of this type completed construction in Irvine in 2010 or 2011. None will deliver in this submarket in 2012. No projects in this category were under way as of mid-August, and none appeared on the planned-proposed list.
- Net absorption soared last year to 569,000 square feet, most of which occurred during the third quarter. The total for first half 2012, however, was only 5,000 square feet; the second-quarter total was negative 3,000 square feet.
- Second-quarter vacancy was 11.2%, unchanged from the quarter prior, down fully 410 basis points year-over-year.
- Flat rents. Average rents for the latest quarter were $5.67 psf and $5.23 psf, asking and effective, down 0.2% and unchanged for the period, down 0.2% and unchanged since year-end as well. Huge losses—10.3% and 8.6%—were sustained, respectively, in 2011.
- Flex/R&D. The Irvine Flex/R&D submarket is the largest of this type county-wide at 10.4 million square feet.
- No space completed construction here in either 2010 or 2011; none will finish in 2012. No projects in this category were under construction per mid-August. Current construction planning consists of one 35,000-square-foot project proposed for the Irvine Business Complex.
- Total first half 2012 Flex/R&D net absorption was 9,000 square feet. The second-quarter total alone, however, was negative 30,000 square feet—in the wake of the negative 107,000 recorded for all of 2011.
- Vacancy ended the second quarter at 10.9%, up 20 basis points for the period, down 100 year-over-year.
- Average asking lease rates for Flex/R&D space for the quarter were $13.77 psf and $12.66 psf, down 0.2% and unchanged for the period, down 0.4% and up 0.2% since year-end. Losses in the neighborhood of 4.0% all told were suffered in 2011.
- Relocating from Fountain Valley, CarMD.com Corporation, a provider of high-tech consumer automotive information and products, has “announced the completion of its new corporate headquarters located at 17352 Von Karman Avenue,” PR Newswire reported in May.
- More. The firm converted 100,000 square feet of warehouse space into “a high-tech office, testing space, and warehouse facility. … The new building features roughly 30,000 square feet of office space, 20,000 square feet of automotive testing space and a 50,000-square-foot fulfillment center.”
- Santa Ana/Tustin. Jones Lang LaSalle reports a 108,000-square-foot second-quarter lease by Atlas Distribution in a 316,000-square-foot Class C warehouse at 500 W. Warner Avenue, Santa Ana, in the Santa Ana/ Tustin submarket.
- The Fountain Valley submarket. A 101,500-square-foot warehouse/ distribution project for Yakult USA Inc. broke ground in July at Newhope and Slater Avenue, Fountain Valley. Reis cites a September 2013 completion date.
- Reis reports 204,200 square feet of Flex/R&D space planned for four phases of Southpark Business Center in Fountain Valley.
- Outlook. Reis expects minimal positive net absorption in Irvine’s warehouse/distribution sector for the remainder of the year as no new space delivers. Growth rates of 0.0% and 0.8% are projected for the asking and effective average lease rates for the year.
North County: Buena Park/Fullerton
- As tracked by Reis, the greater North County market includes the Buena Park/Fullerton, La Habra/Yorba Linda, Placentia, and Cypress/Garden Grove submarkets. Anaheim/Orange, also in the north, is covered separately in the following section. (Some areas of Anaheim, however, are included in the Buena Park/Fullerton and Placentia submarkets.)
- Commentary. An established, traditional industrial market, North County is one of Orange County’s “hottest submarkets,” according to the June Lansner/Register item. “With close proximity to the ports and access to a diverse labor pool, it has created strong demand from tenants. Local landlords are reaping the benefits of that competitive edge.”
- No industrial space of any type completed construction anywhere in the north in 2011 or year-to-date in 2012.
- Warehouse/distribution. The Buena Park/Fullerton submarket claims Orange County’s largest share of existing warehouse/distribution space inventory at 21.5 million square feet.
- Total first half 2012 net absorption in this sector was 155,000 square feet. The second-quarter total alone was 103,000. Last year achieved 214,000 square feet all told.
- Second-quarter vacancy in this sector was 10.1%, down 50 basis points for the period, down 20 year-over-year.
- Average asking and effective lease rates were $5.66 psf and $5.26 psf, up 1.1% and 1.5% for the quarter, up 0.7% and 1.5% since year-end.
- In second quarter’s largest lease county-wide, as reported by Cushman & Wakefield, A&R Logistics renewed for 273,790 square feet at 6250 Caballero Boulevard, Buena Park.
- Flex/R&D. Total Flex/R&D inventory at quarter’s end was 4.1 million square feet.
- Total first half 2012 net absorption was 10,000 square feet.
- Vacancy in this sector closed the second quarter at 5.1%, down from 5.3% the quarter before, down from 5.4% four quarters earlier.
- Mean asking and effective rents were $8.47 psf and $7.84 psf, up 0.8% and 1.2% for the quarter following smaller losses the quarter before and losses in 2011 as well.
- Outlook. Moderate negative net absorption of warehouse/distribution space over the remainder of the year should lift the vacancy rate to 10.4%. Small increases in mean rents are anticipated. Reis expects net absorption of Flex/R&D space in Buena Park/Fullerton to be minimally negative for the remainder of the year as the vacancy rate adds 10 basis points and rents show insubstantial increases.
North County: Anaheim/Orange
- The Anaheim/Orange submarket hosts 13 million square feet of warehouse/distribution space and 6.9 million of Flex/R&D.
- Respective first half 2012 net absorption totals were 16,000 and 3,000 square feet. Both sectors were stronger during the latter quarter.
- Respective second-quarter vacancy rates were 9.6% and just 2.6%, down 20 and 10 basis points for the quarter, down 90 and up 30 year-over-year.
- Average asking rents, both up for the quarter, were $5.74 psf and $8.68 psf.
- No warehouse/distribution space completed construction in this submarket in either 2010 or 2011. No space will deliver in 2012. None was under construction as of mid-August.
- Spec. A 210,000-square-foot speculative warehouse project is planned by Western Realco LLC for a site at 2201 E. Cerritos Avenue, Anaheim. A development timetable has not been specified.
- A 115,500-square-foot unclassified facility is planned for Mercedes Benz at 200 N. Via Cortez, Anaheim.
- Second-quarter leases include Xpress Global Systems’ for 171,775 square feet of warehouse/distribution space at 3320 Miraloma Avenue, Anaheim, as reported by Cushman & Wakefield.
- Outlook. Generally flat performances for supply and demand are expected for both market sectors for the period ahead. Rent growth at about 1.5% is forecast for both markets for the most part for 2012. Flex/R&D development is expected to pick up by 2013.
- The La Habra/Yorba Linda submarket. In a new lease reported by Cushman & Wakefield, eCMM/Foxconn took 184,000 square feet during the second quarter at 105 S. Puente Street, Brea.
- Jones Lang LaSalle reports a 62,000-square-foot Class B manufacturing space lease by Kelly-Wright Hardwoods during the second quarter at 450 Delta Avenue, Brea.
- An 83,000-square-foot warehouse/distribution facility broke ground in April 2012 at Orbiter and Saturn streets, Brea. Reis expects completion in October 2013.
- The Placentia submarket. Reporting in late March, the Orange County Business Journal described Panattoni Development Company’s 1-million-square-foot Anaheim Concourse development in the Anaheim Canyon as “close to groundbreaking.”
- The Cypress/Garden Grove submarket. The 76,032-square-foot, fully occupied, general light industrial building at 5630 Cerritos Avenue, Cypress, sold in May for $13.26 million ($174 psf), Reis reports. Davies-Torrance Trust and Howard Building LLC were buyer and seller.
- More. The deal was part of a $19.26 million portfolio sale totaling approximately 100,000 square feet (see the following section).
West: Costa Mesa/Huntington/Newport Beach
- The Costa Mesa/Huntington/Newport Beach submarket hosts 11.7 million square feet of warehouse/distribution space.
- Total first half 2012 net absorption was 36,000 square feet alongside no new supply.
- Vacancy ended the quarter at 9.0%, unchanged from the quarter before, down 80 basis points year-over-year.
- Average second-quarter asking and effective rents were $5.87 and $5.49 psf, up 0.3% and 0.4% for the period, up 0.7% and 1.1% year-to-date.
- No warehouse/distribution space completed construction here in 2010 or 2011. No projects of this type will deliver in 2012. None was under way per mid-August.
- A 469,000-square-foot headquarters/manufacturing facility is under construction for Hyundai Motor America at 10550 Talbert Avenue, Fountain Valley. Reis cites a December 2013 completion date. CresaPartners is the developer.
- Reis reports the May sale for $6 million ($250 psf) of the fully occupied, 24,026-square-foot Flex/R&D property at 3545 Howard Way, Costa Mesa. Davies-Torrance Trust and Howard Building LLC were buyer and seller.
- More. The deal was part of a $19.26 million portfolio sale totaling approximately 100,000 square feet (see the “Other North” section, above).
- Outlook. Minimal positive net absorption is forecast for the remainder of 2012 accompanied by no new supply. The vacancy rate should shed 10 basis points by year-end. Gains of 1.4% and 2.0% are anticipated for the asking and effective average lease rates for the year.
South County: Lake Forest/Mission Viejo
- Second largest of Orange County’s Flex/R&D submarkets after Irvine, Lake Forest/Mission Viejo hosts 10.2 million square feet of such space. It also includes the huge Irvine Spectrum business park.
- Flex/R&D net absorption for first half 2012 was positive 45,000 square feet. The total for second quarter alone was positive 67,000.
- Vacancy closed the latest quarter at 9.0%, down from 9.7% and 9.9% one and four quarters prior.
- Average asking rents for the latest quarter were $11.33 psf and $10.43 psf, up 0.3% and 0.8% for the period.
- No space completed construction here in 2010 or 2011.
- Locally based retailer Tilly’s Inc. broke ground during the fourth quarter of 2011 for a 26,000-square-foot warehouse/distribution building at 11 Whatney in the Irvine Spectrum. Reis expects completion this October.
- In relocation from elsewhere in Irvine, Printronix, Inc., signed an 84,580-square-foot Flex/R&D space lease during second quarter at 15345 Barranca Parkway in the Irvine Spectrum, according to industry sources.
- Outlook. Reis expects a moderate negative absorption count for the final two quarters of 2012. Year-end vacancy is forecast at 9.3%. Gains of 0.9% and 2.2% are anticipated for the average asking and effective rents for the year.
- Outside of current submarket boundaries, 225,000 square feet of Flex/R&D space is planned for the Ventanas Business Center in San Juan Capistrano. A construction timetable was not specified.